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Token Guides5 min read

Wrapped Bitcoin (WBTC): Bringing BTC to Ethereum DeFi

Learn how WBTC works, its custody model, alternatives like tBTC and cbBTC, and how to use Bitcoin in DeFi.

Why Wrapped Bitcoin?

Bitcoin is the largest cryptocurrency, but it lives on its own blockchain. Wrapped Bitcoin (WBTC) is an ERC-20 token pegged 1:1 to BTC, allowing Bitcoin holders to participate in Ethereum DeFi.

How WBTC Works

  • A user deposits BTC with a custodian (BitGo)
  • The custodian mints an equivalent amount of WBTC on Ethereum
  • WBTC trades freely across Ethereum DeFi
  • To redeem, WBTC is burned and BTC is released

    • Using WBTC in DeFi

    • Collateral: Deposit WBTC on Aave or Compound to borrow stablecoins
    • Liquidity: Provide WBTC-ETH liquidity on Uniswap
    • Yield: Earn interest by lending WBTC
    • Trading: Trade BTC exposure without leaving Ethereum

    Alternatives to WBTC

    • tBTC (Threshold): Decentralized Bitcoin bridge using threshold signatures
    • cbBTC (Coinbase): Coinbase-custodied wrapped Bitcoin
    • sBTC (Stacks): Bitcoin-native smart contract Bitcoin
    • LBTC (Lombard): Liquid staked BTC via Babylon

    Risks

    • Custodial risk: WBTC relies on BitGo custody (centralized)
    • Smart contract risk: Bridge and token contract vulnerabilities
    • Depeg risk: Can trade slightly above or below BTC price

    Getting WBTC on Alkizen

    Swap any token on any chain to WBTC instantly. Alkizen finds the best rate across all DEX liquidity sources.

    WBTCbitcoinwrapped tokensDeFi